Two strikes, out of business under new Arizona employer sanction law

Arizona lawmakers have delivered a heavy-handed message to state employers — receive two violations for knowingly hiring undocumented workers, and the business will face the revocation of all state-issued licenses.

“License revocation is a euphemism for putting people out of business,” said Joe Sigg, government relations director for the 17,000-member Arizona Farm Bureau Federation based in Higley, Ariz.

Arizona’s new employer sanctions law, the Legal Arizona Workers Act, will take effect on Jan. 1, 2008. Governor Janet Napolitano signed the act, House Bill 2779, on July 2, 2007. The legislation was passed by the Arizona Legislature a month earlier, and sponsored by Rep. Russell Pearce, R-Mesa.

The law will basically mandate that companies twice found guilty of hiring undocumented workers be shut down. The law equitably impacts businesses across the board including those that are agriculturally based.

In Arizona agriculture, the area that could be hit the hardest by the new law is Yuma County, where agriculture is a mega-employer. An estimated 25,000 to 50,000 farm workers plant, harvest, pack, and ship vegetables during the winter months. The Yuma area is nationally recognized as the U.S. winter salad bowl, where 80 percent to 90 percent of the nation’s fresh vegetables for salads are grown during the winter months.

Yuma Fresh Vegetable Association president Rick Rademacher, Yuma, Ariz., calls the new Arizona law pretty tough. “It sort of gives people who violate the law an economic death penalty.”

How could the law impact Yuma’s vegetable industry?

“It remains to be seen how Arizona will enforce it,” Rademacher said. “It will make our jobs tougher to get people. We’re not after dirt-cheap labor and we’re not trying to make slave laborers out of these people. While mechanization has grown in the vegetable industry, we still need people to do this job because we can’t duplicate the human hand and the human eye, and the judgment that goes with it.”

In part, the Legal Arizona Workers Act was born out of mountain-high piles of frustration among politicians and others over Congressional inaction to bring comprehensive immigration reform to fruition.

“Immigration is a federal responsibility, but I signed House Bill 2779 because it is now abundantly clear that Congress finds itself incapable of coping with the comprehensive immigration our country needs,” Napolitano said in a letter to Arizona House of Representatives Speaker Jim Weiers.

The legislation is the most aggressive action in the country against employers who knowingly or intentionally hire undocumented workers. “The new law requires employers to verify that the people they employ are present in the country legally,” Napolitano said.

Arizona is prohibited from handing out fines to companies who hire undocumented workers, so the state has flexed its muscles through the state-issued license route.

If an employer is found to knowingly or intentionally employ undocumented workers, the penalty for the first offense is a suspension of state-granted licenses for up to 10 days.

If found guilty twice, the permanent revocation of all state licenses will be handed down — such as the state’s licensing of businesses, driver’s licenses, and a vast array of others.

“Arizona licenses for agriculture, for example, include grower permits, pesticide licenses, state land leases, brands, and handler permits licensed for dairies,” said Sigg. Permit licenses from the Arizona Department of Water Resources and the Arizona Department of Environmental Quality, as well as professional licenses, are not included.

For Arizona agriculture, the new law means new regulations. The law will mandate that the state’s 139,000 employers use the basic pilot program — a worker check system historically dogged by reliability and capability problems. Under the basic pilot, registered employers can check an employee’s work-authorized status within three days after employment.

An estimated 17,000 employers in the United States currently participate in the basic pilot. About half of those actually utilize the program, which Sigg said is a violation of the basic pilot contract between the feds and enrolled employers. The federal government lacks the resources to monitor the 17,000, Sigg stated.

“The federal government is precluded by law from mandating the use of the basic pilot by employers, yet the state of Arizona will require it. We’re talking about 139,000 employers in Arizona.”

The basic pilot has serious discriminatory and reliability issues that need an infusion of an estimated $10 to $12 billion for ‘repairs,’ Sigg noted. In 2006, the federal government funded 1 percent of that amount.

Rademacher also frowns on the basic pilot. If today, every Arizona employer used the program to check on new employees, the system would crash, he said. The basic pilot lacks the capacity to handle what Arizona will soon require.”

The Yuma Fresh Vegetable Association represents shippers, growers, and related industries in the Yuma area. Rademacher, a vegetable grower, is frustrated with the impending law and the continuing difficulty that employers have in authenticating documents.

“We’re not document experts. We’re trying to do the best we can in agriculture. We cannot tell which documents are fake or not. Some fake documents are very, very good,” Rademacher said.

“For Arizona employers, the law will make it real tough. If a mistake is made, will they go to jail or lose their business? I think that’s an unworkable situation.”

The federal government fines employers $250 to $10,000 for hiring an undocumented worker — the amount based on simple mistakes to patterns of behavior. Under the new law, Arizona can put employers out of business for the same offense, Sigg explained.

“If an Arizona employer is unlicensed, undocumented, and paying people under the table, the state can’t touch them. If I’m an unlicensed contractor and I pick up my labor off the street, I’m not at risk.”

Rademacher said the new law fails to provide needed tools to help employers comply with identifying documented workers. What’s needed is a toll-free phone number or an Internet site where employers can verify a person’s work status through the combination of name, birth date, or social security number.

Governor Napolitano agrees the employer sanctions law has its problems, and is considering a special session of the Arizona Legislature this fall to tweak the language before it takes effect.

A legal challenge has been filed, examining the separation of powers between the federal government and the state of Arizona, plus possible violations of due process and discrimination.